Stablecoins, Crypto, and the Future of Digital Regulation

John is joined by Avichal Garg, Managing Partner of Electric Capital and Chairman of the Crypto Council for Innovation, and Emily Kapur, Co-Chair of Quinn Emanuel’s Blockchain & Digital Asset Litigation Practice and partner in the firm’s Silicon Valley office.  They discuss the complex legal and regulatory landscape surrounding cryptocurrency, digital assets, and the intersection with emerging technologies like AI.

The decentralization and autonomy of crypto systems challenges traditional legal concepts.  Crypto technology—ranging from permissionless innovation to autonomous systems—raises foundational legal questions about jurisdiction, liability, and personhood, especially when code may function as both speech and money.  While early legal battles focused on whether tokens are securities, today’s disputes often focus on jurisdictional issues and cross-border liability for autonomous systems with governance distributed around the world.

U.S. dollar-denominated stablecoins, while posing regulatory and competitive challenges, may also be an unparalleled tool for promoting U.S. soft power and economic influence.  They can bypass traditional banking systems and reach global users, reinforcing the dollar’s dominance.  The recently enacted GENIUS Act provides a framework for regulating stablecoins in the U.S. without imposing restrictive reserve requirements, in contrast to European approaches.

The rapid evolution of crypto trading venues—centralized exchanges like Coinbase, decentralized protocols like Uniswap, and traditional financial instruments such as ETFs and digital asset treasuries—highlight the legal uncertainty about which regulatory entities have jurisdiction.  The increasing use of Decentralized Autonomous Organizations (DAOs) poses additional challenges under theories that all participants in a DAO are potentially liable as partners in a joint venture.

More legal innovation is needed, perhaps even entirely new legal entities or frameworks, to accommodate a future in which autonomous code can hold assets, transact, and potentially commit fraud.  Courts may begin to shape precedent in the absence of legislation, but a proactive regulatory approach or legal sandbox might be the key to responsibly managing these potentially disruptive forces.

Ultimately, the question is whether the law will domesticate crypto or will crypto force legal innovation?

Podcast Link: Law-disrupted.fm
Host: John B. Quinn 
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi